Life is different from school in one significant way – in real life you get the test first and the lesson follows. I often say that we learn best from our mistakes, so I’ve definitely learned something this week.
One of my clients recently went into receivership. This is different from bankruptcy, as the Receiver informed me today, because as an unsecured creditor I’m not entitled to any compensation for my completed work. The only secured creditor is the Business Development Bank of Canada (BDC), “a financial institution wholly owned by the government of Canada” (kind of makes me a minor shareholder). The bank gets 100% of what’s left, which equates to about one third of its investment, so the bank suffers a significant loss but the rest of us get nothing.
What have I learned from this?
- It’s better to be a secured creditor than an unsecured one.
- Receivership is different than bankruptcy.
- As one of 30 other unsecured creditors, I see what kind of an impact receivership/bankruptcy has on the local business community.
- Always, always negotiate some up-front payment, even if you have done work with the client before, so that you’re not out 100% in case of a disaster.
- The project isn’t over until the cheque clears the bank.
For additional learning, here are some definitions from the Canadian Bankruptcy Dictionary [link removed by request of BankruptcyCanada.com – see below for text of request]:
Security instrument evidencing a debt due from one party to another, payable on demand or otherwise, which can be a fixed and/or floating charge on assets and which can grant the lender broad powers to recover the amount due upon default, including the appointment of a receiver or receiver-manager.
A person or corporation appointed by a person who holds a debenture or other security agreement, giving that person authority to take possession of and sell the asset(s) specified in the debenture. A Receiver cannot manage or operate a company for more than 14 days.
Receiving Order (Bankruptcy Order):
An Order handed down by the Court following the successful petition to have a person or company placed into bankruptcy. In an amendment dated December 15, 2004 this term was changed to Bankruptcy Order.
email received 2 Jan 2014:
Hi. My name is Gordon Sands. I am a principal of BankruptcyCanada.com.
We are contacting you to respectively request that you remove or mark as “NoFollow” the link(s) you have to BankruptcyCanada.com from http://jarche.com/ because the links are not in the same niche as our site.
Kindly advise us when you have either removed or marked the links “NoFollow” so we do not send you a follow-up email.
Regretfully we will be forced to submit, websites not complying with our request, to Google using their Link Disavow procedure. This may have an adverse effect on your site.
Update: More information on how the golden era of spam comments has ended, and what likely prompted the email “request” above.